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Authorities charge 91 in $430 million Medicare fraud

By David Ingram and David Morgan

WASHINGTON (Reuters) - Ninety-one people including doctors, nurses and other medical professionals were charged criminally in a new sweep of Medicare fraud involving seven U.S. cities and $430 million in alleged false billing, officials said on Thursday.

It was the government's second big raid in recent months after a similar effort in May alleged $452 million in fraud in Medicare, the U.S. health program for the elderly and disabled.

The allegations include billing the government for unnecessary ambulance rides in California, writing prescriptions for patients in Dallas who did not qualify for them and paying kickbacks such as food and cigarettes to patients in Houston if they attended programs a hospital could later bill for.

The investigation is part of an effort by President Barack Obama's administration to find healthcare savings, an issue that also flared during Wednesday's debate between Obama and his Republican challenger, Mitt Romney.

Medicare, a $590 billion program that serves nearly 50 million people, is a primary pot of money for trying to find waste, fraud and abuse.

Indictments against the 91 defendants were unsealed on Thursday after a coordinated investigation led by the U.S. departments of Justice and of Health and Human Services, officials said. Most of the 91 surrendered or were arrested.

Those charged were relatively small-time operators who officials said tried to make a living defrauding Medicare and its sibling program, Medicaid, which insures the poor.

Health and Human Services Secretary Kathleen Sebelius said at a news conference that the sweep should "send a clear message to those perpetrating or contemplating Medicare and Medicaid fraud: It's time to start looking for another line of work."

The examples of fraud "drive up healthcare costs and jeopardize the strength of the Medicare program," said Attorney General Eric Holder, head of the Justice Department.

The government has improved its ability to detect fraud in real time, using software that evaluates reimbursement requests for potential irregularities, officials said.

Of the 91 people charged this week, 33 were involved in false billing in the Miami area. In separate cases, people were accused of improperly billing the government for home health services and mental health services.

Officials said they found an additional $42 million in improper claims at a Houston hospital, Riverside General, where they earlier said they found $116 million in fraud.

That is where officials said there patients received cigarettes and other kickbacks if they attended a "partial hospitalization program." Some patients watched TV instead of receiving services there, the government said.

Riverside General's president was among seven employees facing charges on Thursday. "We're going all the way up and down," said Assistant Attorney General Lanny Breuer, head of the Justice Department's Criminal Division, at the news conference in Washington.

Later on Thursday, a Riverside General clerk read a statement by phone saying the hospital's board is "saddened as to the tactics utilized against this hospital" but supports its president, Earnest Gibson. The board is awaiting legal advice and had no further comment, she said.

The government expects to recoup at least some of what it considers lost money. In a Miami case, the government is restraining $4.6 million in assets including houses and bank accounts, Breuer said.

In addition to fraud and kickback charges, some of the defendants face allegations of identity theft and money laundering.

(Editing by Matthew Lewis, Bernard Orr)

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